Wiki Investment

Thailand

6 Chapter Accounting System

6.1 Overview of accounting system
- Overview of accounting system
  
  ■Overview of accounting system
  
  All companies in Thailand have to prepare and keep accounts. This is not only the case for a limited company, but also for registered partnerships, foreign juristic persons doing business in Thailand, public limited companies and joint ventures. Only a private person is exempted from this obligation. The accounts have to be drafted according to theThai Accounting Standards formulated by the Institute of Certified Accountants and Auditors of Thailand, and should reflect a true and correct image of the company’s expenses and assets.
  
  A newly incorporated company should close its first accounting year within 12 months after its registration, and for the following years the accounting period should be closed every 12 months (per December 31 or another date). The balance sheet — an overview of the assets and liabilities — and the profit and loss accounts have to be prepared and filed at the end of each period. The accounting year may be changed, but written approval from the Director General of the Revenue Department is required.
  
  The financial statements also have to be examined and certified by a licensed accountant (regardless of whether the company has traded or not). Within four months after the closing of the accounting year, the fully signed off accounts should be approved by the Annual Shareholders’ Meeting. Upon approval, the financial statements have to be submitted to the Revenue Department and the Commercial Registrar within one month. Failure to comply with these regulations may result in a penalty up to 200,000 THB.
  
  The accounts and other relevant company documents have to be kept at the company’s registered address for at least five years.
6.2 Person Responsible for accounting record
- Person Responsible for accounting record
  
  Requirement of person responsible for accounting records.
  
  The persons who prepare the accounting must be the members of the Federation of Accounting Profession or register with the Federation of Accounting Profession before conducting the profession and must have the qualification and do not have the prohibited characteristics as specified by the law. The fee for registering as the accountant is 500 or 300 Baht a year depending on the educational level. The accountant who does not have the direct educational certificate in Accounting but acts as the accountant according to section 42, paragraph 2 of the Accounting Act B.E.2543 and informs to prepare the accounting to the Department of Business Development can prepare the accounting for the businesses until 9 August 2008 and must register to the Federation of Accounting Profession. In case that this group of accountants has the qualifications to be the extraordinary members, they can choose to register with the Federation of Accounting Profession. However, if such persons do not continue their study in order to obtain the direct educational certificate in Accounting, they, either the extraordinary members or registering to prepare the accounting, can prepare the accounting until 9 August B.E.2551 only. The accountant must perform the duties according to the Accounting Act B.E.2543 and the Accounting Profession Act B.E.2547 and when he / she starts preparing the accounting, he / she must inform the data regarding the accounting to the Department of Business Development and obtain the accountant code.
  
  Juristic Person Conducting the Business regarding the Controlled Profession
  
  The juristic person conducting the auditing or accounting business must perform the following: (1) Juristic person must register with the Federation of Accounting Profession according to the following condition. - Juristic person providing auditing service or accounting service before the date that the Accounting Profession Act B.E.2547 is effective must submit to register with the Federation of Accounting Profession within 1 year from the date that this Act is effective or within 22 October B.E. 2548. However, if providing the service after the date that this Act is effective must submit the request for registration to the Federation of Accounting Profession within 30 days from the registration to establish juristic person at the Department of Business Development, Ministry of Commerce. The Federation of Accounting Profession identifies the juristic person registration fee for 2,000 Baht per person and must submit to renew the registration every 3 years from the registration date and must renew within 3 months before the expiry date.- Such juristic person must provide the collateral to warrant the guilty towards third party according to the type, number, criteria and procedure identified by the ministerial regulation.- In case that such juristic person conducts the auditing service, the authorized person of such juristic person must be certified public accountant. In case that such juristic person provides auditing or accounting service before 23 October B.E.2547 that this Act is effective, in addition to the registration with the Federation of Accounting Profession, there are temporary provisions that such juristic persons must perform as follows:
  
  - Such juristic person must completely provide the collateral to warrant the guilty towards third party within the period specified by the ministerial regulation but must not exceed 3 years.
  - In case that such juristic person conducts the auditing service, the authorized person of such juristic person must be certified public accountant within 3 years from the effective date of this Act (22 October 2550). (2) In case that the certified public accountant must be responsible for third parties, the juristic person must also be responsible for such third parties as the debtors and if they cannot completely compensate for the damages, the partners or the authorized directors must be responsible for such amount until it is complete, except they can prove that they are not related or do not allow the certified public accountant to conduct the offense.
  
  Ethical Requirement
  
  (1) The persons who conduct the accounting profession or persons who register with the Federation of Accounting Profession are responsible for the ethics of persons in the accounting profession and must perform the duties according to the accounting standard, auditing standard or other standards relevant to this Act.
  
  (2) The Federation of Accounting Profession must prepare the Ethics in Thai language and at least must consist of the following requirement.
  
  - Transparency, independence, honesty and integrity
  
  - Knowledge, capability, and work standards
  
  - Responsibility towards the customers and confidentiality
  
  - Responsibility towards shareholders, partners, or persons or juristic persons whom the accountant prepares the accounting for
  
  (3) The following conducts can be viewed as misconduct towards the ethics
  
  - Do not perform the duties according to the Ethics
  
  - Do not perform the duties according to the accounting standard, auditing standard or other standards relevant to this Act.
  
  - The certified public accountant must report the auditing outcome by mentioning the statement to demonstrate that he / she will not be responsible for the auditing outcome or demonstrate the unclearness in the auditing outcome due to the fact that he / she does not completely performs the duties according to the auditing standard.
  
  Penalties from the misconduct has been identified from light to heavy punishment as follows:
  
  (1) Written warning
  
  (2) Probation
  
  (3) Suspending the license / registration / prohibiting from conducting the accounting profession in the areas that are misconduct for no more than 3 years
  
  (4) Revoking the license / registration or membership
  
  Consideration and Punishment: When persons accuse that or the Ethics Committee find that the persons who conduct the accounting profession or persons who register with the Federation of Accounting Profession perform misconduct behaviors, the ethics committee will investigate immediately and if the outcome of the investigation turns out that such persons perform misconduct behaviors, the ethics committee shall have the order for punishment according to Clause 7.2. The issuance of the order for punishment or repealing the excuse must inform the person who is accused or person who accuses immediately.
  
  The persons who accuse or persons whom the Ethics Committee order for punishment have the right to appeal the order to the accounting profession supervision committee via the Department of Business Development within 30 days from the date that they obtain the order according to the criteria and procedure specified by the accounting profession supervision committee, and such appeal does not lessen the performance according to the order for punishment, except the accounting profession supervision committee orders to perform other cases and the decision of the accounting profession supervision committee shall be considered final.
  
  ■Obligations of person responsible for accounting records.
  
  Registered partnerships; limited company or public limited company; juristic persons incorporated under foreign law and operating/carrying on business in Thailand (Section 76 bis Tax Revenue Code); joint ventures established under the Revenue Code; business offices with regular operations; and any other persons stipulated by the Minister have an obligation to keep accounts. All juristic persons or companies must keep books and follow accounting and audit procedures as specified in the Civil and Commercial Code, Public Limited Company Act, Revenue Code, Accounting Act, etc.
  
  Furthermore, they must also follow the Thai Accounting Standard formulated by the Institute of Certified Accountants and Auditors of Thailand and duly enforced by the Board of supervision.
  
  The Bookkeepers of those companies above has responsibilities to keep the book entries, submit taxes, handle social security fund entries, etc.
  
  The second responsibility is for the juristic company or partnership to supervise and monitor the bookkeeper work. Finally it has to submit financial statements within specified times.
  
  ■Audit and penal regulations
  
  The Accounting Act contains several provisions that provide sanctions applicable to offences in relation to the maintaining of the accounts of a company.
  
  For example, the following offences are punishable under the Accounting Act: the failure to prepare accounts when required to do so by law (fine not exceeding THB 30,000); the failure to close its accounts every 12 months; to deliver the bookkeeper accurate documents required or to have a qualified

6.3 Accounting Standard

Accounting Standard

Introduction of IFRS

Thailand is one of many countries that trying to adopt the accounting standard follow IFRS and called Thai Financial Reporting Standards (TFRS) and Thai Accounting Standards (TAS)

Currently, TFRS and TAS are adopted from IFRS and IAS but some of IFRS are not in use. These are TFRS that are effective in Thailand.

Thai Financial Reporting Standards (TFRS) and Thai Accounting Standards (TAS)
Thai Accounting Standards (TAS)		Effective date	IAS Ref.	BV
The Conceptual financial Reporting Standards (revised 2009)			Framework for the Preparation and Presentation of Financial Statements	2009
TAS 1 (revised 2012)	Presentation of Financial Statements	1 January 2014	IAS 1 Presentation of Financial Statements	2012
TAS 2 (revised 2009)	Inventories	1 January 2011	IAS 2 Statement of Cash Flows	2009
TAS 7 (revised 2012)	Statement of Cash Flows	1 January 2014	IAS 7 Statement of Cash Flows	2012
TAS 8 (revised 2009)	Accounting Policies, Changes in Accounting Estimates and Errors	1 January 2011	IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors	2009
TAS 10 (revised 2009)	Events after the Reporting Period	1 January 2011	IAS 10 Events after the Reporting Period	2009
TAS 11 (revised 2009)	Construction Contracts	1 January 2011	IAS 11 Construction Contracts	2009
TAS 12 (revised 2012)	Income Taxes	1 January 2014	IAS 12 Income Taxes	2012
TAS 16 (revised 2009)	Property, Plant and Equipment	1 January 2011	IAS 16 Property, Plant and Equipment	2009
TAS 17 (revised 2012)	Leases	1 January 2014	IAS 17 Leases	2012
TAS 18 (revised 2012)	Revenue	1 January 2014	IAS 18 Revenue	2012
TAS 19 (revised 2012)	Employee Benefits	1 January 2014	IAS 19 Employee Benefits	2012
TAS 20 (revised 2009)	Accounting for Government Grants and Disclosure of Government Assistance	1 January 2013	IAS 20 Accounting for Government Grants and Disclosure of Government Assistance	2009
TAS 21 (revised 2012)	The Effects of Changes in Foreign Exchange Rates	1 January 2014	IAS 21 The Effects of Changes in Foreign Exchange Rates	2012
TAS 23 (revised 2009)	Borrowing Cost	1 January 2011	IAS 23 Borrowing Costs	2009
TAS 24 (revised 2012)	Related Party Disclosures	1 January 2014	IAS 24 Related Party Disclosures	2012
TAS 26	Accounting and Reporting by Retirement Benefit Plans	1 January 2011	IAS 26 Accounting and Reporting by Retirement Benefit Plans	2009
TAS 27 (revised 2009)	Consolidated and Separate Financial Statements	1 January 2011	IAS 27 Consolidated and Separate Financial Statements	2009
TAS 28 (revised 2012)	Investment in Associates	1 January 2014	IAS 28 Investments in Associates	2012
TAS 29	Financial Reporting in Hyperinflationary Economics	1 January 2011	IAS 29 Financial Reporting in Hyperinflationary Economies	2009
TAS 31 (revised 2012)	Interests in Joint Ventures	1 January 2014	IAS 31 Interests in Joint Ventures	2012
TAS 33 (revised 2009)	Earnings per Share	1 January 2011	IAS 33 Earnings per Share	2009
TAS 34 (revised 2012)	Interim Financial Reporting	1 January 2014	IAS 34 Interim Financial Reporting	2012
TAS 36 (revised 2012)	Impairment of Assets	1 January 2014	IAS 36 Impairment of Assets	2012
TAS 37 (revised 2009)	Provisions, Contingent Liabilities and Contingent Assets	1 January 2011	IAS 37 Provisions, Contingent Liabilities and Contingent Assets	2009
TAS 38 (revised 2012)	Intangible Assets	1 January 2014	IAS 38 Intangible Assets	2012
TAS 40 (revised 2009)	Investment Property	1 January 2011	IAS 40 Investment Property	2009
Thai Financial Reporting Standards (TFRS)		Effective date	IFRS Ref.	BV
TFRS 2 (revised 2012)	Share-based Payment	1 January 2014	IFRS 2 Share-based Payment	2012
TFRS 3 (revised 2012)	Business Combinations	1 January 2014	IFRS 3 Business Combinations	2012
TFRS 4	Insurance Contracts	1 January 2016	IFRS 4 Insurance Contracts	2012
TFRS 5 (revised 2012)	Non-current Assets Held for Sale and Discontinued Operations	1 January 2014	IFRS 5 Non-current Assets Held for Sale and Discontinued Operations	2012
TFRS 6 (revised 2009)	Exploration for and Evaluation of Mineral Resources	1 January 2011	IFRS 6 Exploration for and Evaluation of Mineral Resources	2009
TFRS 8 (revised 2012)	Operating Segment	1 January 2014	IFRS 8 Operating Segments	2012

■Companies those are applicable for Thai Accounting Standard

Normally, small enterprises (registered partnership and limited company established under Thai laws) which are defined as having, on the date of closing the accounts, registered capital of not more than THB 5 million, and total assets of not more than THB 30 million, and annual income of not more than THB 30 million, use TFRS (Thai Financial Reporting standards) for NPAEs.

6.4 Problem and accounting system
- Problem and accounting system
  
  ■Lack of certified public accountants
  
  Recently, Thailand has CPAs around 10,000 person while the number of enterprises in Thailand is around 600,000 companies. Ratio is approximately CPAs to companies 1:60
  
  ■Lack of accounting system
  
  Facing to small and medium sized enterprises and sole proprietorship. For sole-owner companies or small-sized companies in Thailand are often to face the problem about accounting system such as document flow, tax regulations and tax submit.
  
  ■Bookkeeper by accounting firm
  
  Local bookkeeping firms don’t have enough standard to prepare financial statement for company well. Because they engage to clients so many companies. So that force accounting staff to handle at least 6-10 clients. More clients to handle lead lower quality to accounting tasks, this is the main problem that local accounting firm facing.
6.5 Disclosure system and disclosure practice
- Disclosure system and disclosure practice
  
    According to Thai Financial Reporting Standards for Non-Publicly Accountable Entities (NPAEs) that referenced from TFRS for SMEs and Publicly Accountable Entities (PAEs) that referenced from International Accounting Standard, the disclosure contain information for presentation in the statement of financial position, statement of comprehensive income (if any), income statement, combined statement of income and retained earnings (if any), statement of changes in equity and statement of cash flows (if any) and provide narrative descriptions or dis-aggregations of items presented in those statements and information about items that do not qualify for recognition in those statements.
  
  ■Overview of disclosure system
  
  The disclosure shall include present information about the basis of preparation of the financial statements and the specific accounting policies used and as well provide information that is not presented elsewhere in the financial statements but is relevant to an understanding of any of them. An entity shall, as far as practicable, present the notes in a systematic manner and shall cross-reference each item in the financial statements to any related information in the notes.
  
  ■Flow of disclosure practice (Privately owned company)
  
  According to Thai Financial Reporting Standards for Non-Publicly Accountable Entities (NPAEs) that referenced from TFRS for SMEs, the disclosure must be included general features, fair presentation and compliance that shall present fairly the financial position, financial performance. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework. The application of NPAEs, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation.
  
  ■Schedule of disclosure
  
  An entity of financial statements shall be an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements unless they comply with all the requirements. In virtually all circumstances, an entity achieves a fair presentation. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:
  
  (a) Assets;
  
  (b) Liabilities;
  
  (c) Equity;
  
  (d) Income and expenses, including gains and losses;
  
  (e) Contributions by and distributions to owners in their capacity as owners; and this information, along with other information in the notes, assists users of financial statements in predicting the entity’s future profit and operation, in particular, their timing and certainty.
  
  In additional, it is required a complete set of financial statements comprises:
  
  (a) A statement of financial position as at the end of the period;
  
  (b) A statement of income for the period;
  
  (c) A statement of changes in equity for the period;
  
  (d) Notes, comprising a summary of significant accounting policies and other explanatory information; and
  
  (e) A statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.
  
  An entity may use titles for the statements other than those used in this Standard and also present with equal prominence all of the financial statements in a complete set of financial statements. An entity may present the components of profit or loss either as part of a single statement of comprehensive income or in a separate statement of comprehensive income.
  
  ■Content of disclosure
  
  The content of disclosure shall include disclosure of accounting policies that the summary of significant accounting policies as follows:
  
  (a) The measurement basis (or bases) used in preparing the financial statements.
  
  (b) The other accounting policies used that are relevant to an understanding of the financial statements. Information about judgements
  
  An entity shall disclose, in the summary of significant accounting policies or other notes, the judgements, apart from those involving estimations that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements. In addition, the information about key sources of estimation uncertainty shall disclose in the notes information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
  
  In addition, in respect of those assets and liabilities, the notes shall include details of:
  
  (a) Their nature
  
  (b) Their carrying amount as at the end of the reporting period.
  
  ■Flow of disclosure practice (Listed enterprise)
  
  ■Schedule of disclosure
  
  Financial statements are a structured representation of the financial position and financial performance of an entity. The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s:
  
  (a) Assets;
  
  (b) Liabilities;
  
  (c) Equity;
  
  (d) Income and expenses, including gains and losses;
  
  (e) Contributions by and distributions to owners in their capacity as owners; and
  
  (f) Cash flows.
  
  This information, along with other information in the notes, assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing and certainty.
  
  A complete set of financial statements comprises is required as follows:
  
  (a) A statement of financial position as at the end of the period;
  
  (b) A statement of comprehensive income for the period;
  
  (c) A statement of changes in equity for the period;
  
  (d) A statement of cash flows for the period;
  
  (e) Notes, comprising a summary of significant accounting policies and other explanatory information; and
  
  (f) a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements. An entity may use titles for the statements other than those used in this Standard. An entity shall present with equal prominence all of the financial statements in a complete set of financial statements.
  
  An entity may present the components of profit or loss either as part of a single statement of comprehensive income or in a separate statement of comprehensive income. When a statement of comprehensive income is presented it is part of a complete set of financial statements and shall be displayed immediately before the statement of comprehensive income.
  
  Many entities present, outside the financial statements, a financial review by management that describes and explains the main features of the entity’s financial performance and financial position, and the principal uncertainties it faces. Such a report may include a review of:
  
  (a) The main factors and influences determining financial performance, including changes in the environment in which the entity operates, the entity’s response to those changes and their effect, and the entity’s policy for investment to maintain and enhance financial performance, including its dividend policy;
  
  (b) The entity’s sources of funding and its targeted ratio of liabilities to equity; and
  
  (c) The entity’s resources not recognized in the statement of financial position. However, many entities also present, outside the financial statements, reports and statements such as environmental reports and value added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group but reports and statements presented outside financial statements are outside the scope of PAEs.
  
  ■Content of disclosure
  
  An entity shall clearly identify the financial statements and distinguish them from other information in the same published document. Therefore, it is important that users can distinguish information that is prepared using same standard from other information that may be useful to users but is not the subject of those requirements. In addition, an entity shall display the following information prominently, and repeat it when necessary for the information presented to be understandable:
  
  General information
  
  (a) The name of the reporting entity or other means of identification, and any change in that information from the end of the preceding reporting
  
  (b) Whether the financial statements are of an individual entity or a group of entities;
  
  (c) The date of the end of the reporting period or the period covered by the set of financial statements or notes;
  
  (d) The presentation currency, as defined in IAS 21; and
  
  (e) The level of rounding used in presenting amounts in the financial statements.
  
  An entity meets the requirements by presenting appropriate headings for pages, statements, notes, columns and the like. Judgement is required in determining the best way of presenting such information. For example, when an entity presents the financial statements electronically, separate pages are not always used; an entity then presents the above items to ensure that the information included in the financial statements can be understood. Moreover, an entity often makes financial statements more understandable by presenting information in thousands or millions of units of the presentation currency. This is acceptable as long as the entity discloses the level of rounding and does not omit material information.
  
  The statement of financial position
  
  As a minimum, the statement of financial position shall include line items that present the following amounts:
  
  (a) Property, plant and equipment;
  
  (b) Investment property;
  
  (c) Intangible assets;
  
  (d) Financial assets (excluding amounts shown under (e), (h) and (i));
  
  (e) Investments accounted for using the equity method;
  
  (f) Biological assets;
  
  (g) Inventories;
  
  (h) Trade and other receivables;
  
  (i) Cash and cash equivalents;
  
  (j) The total of assets classified as held for sale and assets included in disposal groups classified as held for sale
  
  (k) Trade and other payables;
  
  (l) Provisions;
  
  (m) Financial liabilities (excluding amounts shown under (k) and (l));
  
  (n) Liabilities and assets for current tax, as defined in IAS 12 Income Taxes;
  
  (o) Deferred tax liabilities and deferred tax assets, as defined in IAS 12;
  
  (p) Liabilities included in disposal groups classified as held for sale in accordance with IFRS 5;
  
  (q) Non-controlling interest, presented within equity; and
  
  (r) Issued capital and reserves attributable to owners of the parent.
  
  An entity shall present additional line items, headings and subtotals in the statement of financial position when such presentation is relevant to an understanding of the entity’s financial position. When an entity presents current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities).
  
  In addition:
  
  (a)   Line items are included when the size, nature or function of an item or aggregation of similar items is such that separate presentation is relevant to an understanding of the entity’s financial position; and
  
  (b) The descriptions used and the ordering of items or aggregation of similar items may be amended according to the nature of the entity and its transactions, to provide information that is relevant to an understanding of the entity’s financial position. For example, a financial institution may amend the above descriptions to provide information that is relevant to the operations of a financial institution.
  
  An entity makes the judgement about whether to present additional items separately on the basis of an assessment of:
  
  (a) The nature and liquidity of assets;
  
  (b) The function of assets within the entity; and
  
  (c) The amounts, nature and timing of liabilities.
  
  
  
  The use of different measurement bases for different classes of assets suggests that their nature or function differs and, therefore, that an entity presents them as separate line items. For example, different classes of property, plant and equipment can be carried at cost. An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position except when a presentation based on liquidity provides information that is reliable and more relevant. When that exception applies, an entity shall present all assets and liabilities in order of liquidity.
  
  Whichever method of presentation is adopted, an entity shall disclose the amount expected to be recovered or settled after more than twelve months for each asset and liability line item that combines amounts expected to be recovered or settled:
  
  (a) No more than twelve months after the reporting period, and
  
  (b) More than twelve months after the reporting period.
  
  When an entity supplies goods or services within a clearly identifiable operating cycle, separate classification of current and non-current assets and liabilities in the statement of financial position provides useful information by distinguishing the net assets that are continuously circulating as working capital from those used in the entity’s long-term operations. It also highlights assets that are expected to be realized within the current operating cycle, and liabilities that are due for settlement within the same period. For some entities, such as financial institutions, a presentation of assets and liabilities in increasing or decreasing order of liquidity provides information that is reliable and more relevant than a current/noncurrent presentation because the entity does not supply goods or services within a clearly identifiable operating cycle.
  
  Some entity is permitted to present some of its assets and liabilities using a current/non-current classification and others in order of liquidity when this provides information that is reliable and more relevant. The need for a mixed basis of presentation might arise when an entity has diverse operations.
  
  Information about expected dates of realization of assets and liabilities is useful in assessing the liquidity and solvency of an entity. Financial Instruments: Disclosures requires disclosure of the maturity dates of financial assets and financial liabilities. Financial assets include trade and other receivables, and financial liabilities include trade and other payables. Information on the expected date of recovery of non-monetary assets such as inventories and expected date of settlement for liabilities such as provisions is also useful, whether assets and liabilities are classified as current or as non-current. For example, an entity discloses the amount of inventories that are expected to be recovered more than twelve months after the reporting period.
  
  An entity shall classify an asset as current when:
  
  (a) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
  
  (b) It holds the asset primarily for the purpose of trading;
  
  (c) It expects to realize the asset within twelve months after the reporting period; or
  
  (d) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
  
  An entity shall classify all other assets as non-current, uses the term ‘non-current’ to include tangible, intangible and financial assets of a long-term nature. It does not prohibit the use of alternative descriptions as long as the meaning is clear. The operating cycle of an entity is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be 12 months. Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realized as part of the normal operating cycle even when they are not expected to be realized within 12 months after the reporting period. Current assets also include assets held primarily for the purpose of trading ((examples include some financial assets classified as held for trading and the current portion of non-current financial assets.
  
  An entity shall classify a liability as current when:
  
  (a) It expects to settle the liability in its normal operating cycle;
  
  (b) It holds the liability primarily for the purpose of trading;
  
  (c) The liability is due to be settled within twelve months after the reporting period; or
  
  (d) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period (see paragraph 73). Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
  
  An entity shall classify all other liabilities as non-current. Some current liabilities, such as trade payables and some accruals for employee and other operating costs, are part of the working capital used in the entity’s normal operating cycle. An entity classifies such operating items as current liabilities even if they are due to be settled more than twelve months after the reporting period. The same normal operating cycle applies to the classification of an entity’s assets and liabilities. When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months.
  
  Other current liabilities are not settled as part of the normal operating cycle, but are due for settlement within 12 months after the reporting period or held primarily for the purpose of trading. Examples are some financial liabilities classified as held for trading, bank overdrafts, and the current portion of non-current financial liabilities, dividends payable, income taxes and other non-trade payables.
  
  Financial liabilities that provide financing on a long-term basis (ie are not part of the working capital used in the entity’s normal operating cycle) and are not due for settlement within 12 months after the reporting period are non-current liabilities, an entity classifies its financial liabilities as current when they are due to be settled within twelve months after the reporting period, even if:
  
  (a) The original term was for a period longer than twelve months, and
  
  (b) An agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue.
  
  If an entity expects, and has the discretion, to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility, it classifies the obligation as non-current, even if it would otherwise be due within a shorter period. However, when refinancing or rolling over the obligation is not at the discretion of the entity (for example, there is no arrangement for refinancing), the entity does not consider the potential to refinance the obligation and classifies the obligation as current. When an entity breaches a provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand, it classifies the liability as current, even if the lender agreed, after the reporting period and before the authorization of the financial statements for issue, not to demand payment as a consequence of the breach. An entity classifies the liability as current because, at the end of the reporting period, it does not have an unconditional right to defer its settlement for at least twelve months after that date.
  
  However, an entity classifies the liability as non-current if the lender agreed by the end of the reporting period to provide a period of grace ending at least twelve months after the reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment. In respect of loans classified as current liabilities, if the following events occur between the end of the reporting period and the date the financial statements are authorized for issue, those events are disclosed as non-adjusting events in accordance with IAS 10 Events after the Reporting Period:
  
  (a) Refinancing on a long-term basis;
  
  (b) Rectification of a breach of a long-term loan arrangement; and
  
  (c) The granting by the lender of a period of grace to rectify a breach of a long-term loan arrangement ending at least twelve months after the reporting period. Information to be presented either in the statement of financial position or in the notes
  
  An entity shall disclose, either in the statement of financial position or in the notes, further sub classifications of the line items presented, classified in a manner appropriate to the entity’s operations. The detail provided in sub classifications depends on the requirements and on the size, nature and function of the amounts involved. An entity also uses the factors to decide the basis of sub classification. The disclosures vary for each item, for example:
  
  (a) Items of property, plant and equipment are disaggregated into classes
  
  (b) Receivables are disaggregated into amounts receivable from trade customers, receivables from related parties, prepayments and other amounts;
  
  (c) Inventories are disaggregated, in accordance with IAS 2 Inventories, into classifications such as merchandise, production supplies, materials, work in progress and finished goods;
  
  (d) Provisions are disaggregated into provisions for employee benefits and other items; and
  
  (e) Equity capital and reserves are disaggregated into various classes, such as paid-in capital, share premium and reserves.
  
  An entity shall disclose the following, either in the statement of financial position or the statement of changes in equity, or in the notes:
  
  (a) For each class of share capital:
  
  (i) The number of shares authorized;
  
  (ii) The number of shares issued and fully paid, and issued but not fully paid;
  
  (iii) Par value per share, or that the shares have no par value;
  
  (iv) A reconciliation of the number of shares outstanding at the beginning and at the   end of the period;
  
  (v) The rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital;
  
  (vi) Shares in the entity held by the entity or by its subsidiaries or associates; and
  
  (vii) Shares reserved for issue under options and contracts for the sale of shares, including terms and amounts; and
  
  (b) a description of the nature and purpose of each reserve within equity.
  
  80 An entity without share capital, such as a partnership or trust, shall disclose information equivalent to that required by paragraph 79(a), showing changes during the period in each category of equity interest, and the rights, preferences and restrictions attaching to each category of equity interest.
  
  If an entity has reclassified
  
  (a) A puttable financial instrument classified as an equity instrument, or
  
  (b) An instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and is classified as an equity instrument between financial liabilities and equity, it shall disclose the amount reclassified into and out of each category (financial liabilities or equity), and the timing and reason for that reclassification.
  
  The income and expense recognized in a period
  
  An entity shall present all items of income and expense recognized in a period:
  
  (a) In a single statement of comprehensive income, or
  
  (b) In two statements: a statement displaying components of profit or loss (separate statement of comprehensive income) and a second statement beginning with profit or loss and displaying components of other comprehensive income (statement of comprehensive income).
  
  The statement of comprehensive income
  
  As a minimum, the statement of comprehensive income shall include line items that present the following amounts for the period:
  
  (a) revenue;
  
  (b) finance costs;
  
  (c) share of the profit or loss of associates and joint ventures accounted for using the equity method;
  
  (d) tax expense;
  
  (e) a single amount comprising the total of:
  
  (i) the post-tax profit or loss of discontinued operations and
  
  (ii) the post-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation;
  
  (f) profit or loss;
  
  (g) each component of other comprehensive income classified by nature (excluding amounts in (h));
  
  (h) share of the other comprehensive income of associates and joint ventures accounted for using the equity method; and
  
  (i) total comprehensive income.
  
  An entity shall disclose the following items in the statement of comprehensive income as allocations of profit or loss for the period:
  
  (a) profit or loss for the period attributable to:
  
  (i) non-controlling interest, and
  
  (ii) owners of the parent.
  
  (b) total comprehensive income for the period attributable to:
  
  (i) non-controlling interest, and
  
  (ii) owners of the parent.
  
  Circumstances that would give rise to the separate disclosure of items of income and expense include:
  
  (a) write-downs of inventories to net realisable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs;
  
  (b) restructurings of the activities of an entity and reversals of any provisions for the costs of restructuring;
  
  (c) disposals of items of property, plant and equipment;
  
  (d) disposals of investments;
  
  (e) discontinued operations;
  
  (f) litigation settlements; and
  
  (g) other reversals of provisions.
  
  Expenses are subclassified to highlight components of financial performance that may differ in terms of frequency, potential for gain or loss and predictability. This analysis is provided in one of two forms.
  
  The first form of analysis is the ‘nature of expense’ method. An entity aggregates expenses within profit or loss according to their nature (for example, depreciation, purchases of materials, transport costs, employee benefits and advertising costs), and does not reallocate them among functions within the entity. This method may be simple to apply because no allocations of expenses to functional classifications are necessary. An example of a classification using the nature of expense method is as follows:
  
  The second form of analysis is the ‘function of expense’ or ‘cost of sales’ method and classifies expenses according to their function as part of cost of sales or, for example, the costs of distribution or administrative activities. At a minimum, an entity discloses its cost of sales under this method separately from other expenses. This method can provide more relevant information to users than the classification of expenses by nature, but allocating costs to functions may require arbitrary allocations and involve considerable judgement. An example of a classification using the function of expense method is as follows:
  
  The statement of changes in equity
  
  Information to be presented in the statement of changes in equity includes the following information:
  
  (a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interest;
  
  (b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with IAS 8; and
  
  (c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:
  
  (i) profit or loss;
  
  (ii) other comprehensive income; and
  
  (iii) transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.
  
  For each component of equity an entity shall present, either in the statement of changes in equity or in the notes, an analysis of other comprehensive income by item. An entity shall present, either in the statement of changes in equity or in the notes, the amounts of dividends recognised as distributions to owners during the period, and the related amount of dividends per share. The components of equity include, for example, each class of contributed equity, the accumulated balance of each class of other comprehensive income and retained earnings.
  
  Changes in an entity’s equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. Except for changes resulting from transactions with owners in their capacity as owners (such as equity contributions, reacquisitions of the entity’s own equity instruments and dividends) and transaction costs directly related to such transactions, the overall change in equity during a period represents the total amount of income and expense, including gains and losses, generated by the
  
  entity’s activities during that period.
  
  Cash flow information provides users of financial statements with a basis to assess the ability of the entity to generate cash and cash equivalents and the needs of the entity to utilise those cash flows.
  
  Note to financial statement
  
  The notes shall:
  
  (a) present information about the basis of preparation of the financial statements and the specific accounting policies used in accordance with paragraphs 117–124;
  
  (b) disclose the information required by IFRSs that is not presented elsewhere in the financial statements; and
  
  (c) provide information that is not presented elsewhere in the financial statements, but is relevant to an understanding of any of them.
  
  An entity shall, as far as practicable, present notes in a systematic manner. An entity shall cross reference each item in the statements of financial position and of comprehensive income, in the separate statement of comprehensive income (if presented), and in the statements of changes in equity and of cash flows to any related information in the notes.
  
  An entity normally presents notes in the following order, to assist users to understand the financial statements and to compare them with financial statements of other entities:
  
  (a) statement of compliance with IFRSs (see paragraph 16);
  
  (b) summary of significant accounting policies applied (see paragraph 117);
  
  (c) supporting information for items presented in the statements of financial position and of comprehensive income, in the separate statement of comprehensive income (if presented), and in the statements of changes in equity and of cash flows, in the order in which each statement and each line item is presented; and
  
  (d) other disclosures, including:
  
  (i) contingent liabilities and unrecognised contractual commitments, and
  
  (ii) non-financial disclosures, eg the entity’s financial risk management objectives and policies
  
  An entity may present notes providing information about the basis of preparation of the financial statements and specific accounting policies as a separate section of the financial statements. In addition, an entity shall disclose in the summary of significant accounting policies:
  
  (a) the measurement basis (or bases) used in preparing the financial statements, and
  
  (b) the other accounting policies used that are relevant to an understanding of the financial statements.
  
  It is important for an entity to inform users of the measurement basis or bases used in the financial statements (for example, historical cost, current cost, net realisable value, fair value or recoverable amount) because the basis on which an entity prepares the financial statements significantly affects users’ analysis.

6.6 Audit System

Audit System

Overall Objectives of the External audit is conducting an audit of financial statements, the overall objectives of the auditor are:

(a) To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework; and

(b) To report on the financial statements, and communicate as required by the ISAs, in accordance with the auditor’s findings. 12. In all cases when reasonable assurance cannot be obtained and a qualified opinion in the auditor’s report is insufficient in the circumstances for purposes of reporting to the intended users of the financial statements, the ISAs require that the auditor disclaim an opinion or withdraw (or resign) from the engagement, where withdrawal is possible under applicable law or regulation.

On the other hand, the purpose of Internal Audit is to establish standards and provide guidance in respect of planning an internal audit. An internal audit plan is a document defining the scope, coverage and resources, including time, required for an internal audit over a defined period. The internal auditor should, in consultation with those charged with governance, including the audit committee, develop and document a plan for each internal audit engagement to help him conduct the engagement in an efficient and timely manner. Adequate planning ensures that appropriate attention is devoted to significant areas of audit, potential problems are identified, and that the skills and time of the staff are appropriately utilized.

■Internal audit system

The overall objectives of an internal audit, as defined in the Preface to the Standards on Internal Audit are:

· to suggest improvements to the functioning of the entity; and

· to strengthen the overall governance mechanism of the entity, including its strategic risk management as well as internal control system.

Internal audit system shall help as follows;

(i) Understanding and assessing the risks and evaluate the adequacies of the prevalent internal controls.

(ii) Identifying areas for systems improvement and strengthening controls.

(iii) Ensuring optimum utilization of the resources of the entity, for example, human resources, physical resources etc.

(iv) Ensuring proper and timely identification of liabilities, including contingent liabilities of the entity. Planning an Internal Audit

(v) Ensuring compliance with internal and external guidelines and policies of the entity as well as the applicable statutory and regulatory requirements.

(vi) Safeguarding the assets of the entity.

(vii) Reviewing and ensuring adequacy of information systems security and control.

(viii)Reviewing and ensuring adequacy, relevance, reliability and timeliness of management information system.

The internal audit plan should be comprehensive enough to ensure that it helps in achieving of the above overall objectives of an internal audit. The internal audit plan should, generally, also be consistent with the goals and objectives of the internal audit function as listed out in the internal audit charter as well as the goals and objectives of the organization. An internal audit charter is an important document defining the position of the internal audit the organization.

The internal audit charter also outlines the scope of internal audit as well as the duties, responsibilities and powers of the internal auditor(s). In case the entire internal audit or the particular internal audit engagement has been outsourced, the internal auditor should also ensure that the plan is consistent with the terms of the engagement. Planning involves developing an overall plan for the expected scope and conduct of audit and developing an audit programme showing the nature, timing and extent of audit procedures. Planning is a continuous exercise. A plan once prepared should be continuously reviewed by the internal auditor to identify any modifications required to bring the same in line with the changes, if any, in the audit environment. However, any major modification to the internal audit plan should be done in consultation with those charged with governance. Further, the internal auditor should also document the changes to the internal audit plan. This may also discuss the significant elements of his overall plan, including important procedures, with those charged with Standard on Internal Audit.

This would help the internal auditor as well as the client to assess whether the internal audit is directed to achieve the objectives as set out in the terms of engagement. The discussion would also help the internal auditor to gauge whether the client’s perception of the role and responsibilities of the internal auditor is appropriate. The internal auditor should also assess the client expectations as to the assurance level on different aspect of entity’s operations and controls. For instance, the client may feel assured if inventories are verified once in a quarter, while for cash verification, monthly interval may be specified. This will enable the auditor to plan the frequency and extent of audit procedures to be adopted.

■ External audit system

The Thai Standard on Auditing (TSA) that referenced from International Standard on Auditing (ISA) deals with the independent auditor’s overall responsibilities when conducting an audit of financial statements in accordance with ISAs. Specifically, it sets out the overall objectives of the independent auditor, and explains the nature and scope of an audit designed to enable the independent auditor to meet those objectives. It also explains the scope, authority and structure of the ISAs, and includes requirements establishing the general responsibilities of the independent auditor applicable in all audits, including the obligation to comply with the ISAs. The independent auditor is referred to as “the auditor” hereafter.

The context of an audit of financial statements was written by an auditor. They are to be adapted as necessary in the circumstances when applied to audits of other historical financial information. ISAs do not address the responsibilities of the auditor that may exist in legislation, regulation or otherwise in connection with, for example, the offering of securities to the public. Such responsibilities may differ from those established in the ISAs. Accordingly, while the auditor may find aspects of the ISAs helpful in such circumstances, it is the responsibility of the auditor to ensure compliance with all relevant legal, regulatory or professional obligations.

The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. In the case of most general purpose frameworks, that opinion is on whether the financial statements are presented fairly, in all material respects, or give a true and fair view in accordance with the framework. An audit conducted in accordance with ISAs and relevant ethical requirements enables the auditor to form that opinion. The financial statements subject to audit are those of the entity, prepared by management of the entity with oversight from those charged with governance. ISAs do not impose responsibilities on management or those charged with governance and do not override laws and regulations that govern their responsibilities.

However, an audit is conducted on the premise that management and, where appropriate, those charged with governance have acknowledged certain responsibilities that are fundamental to the conduct of the audit. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities. As the basis for the auditor’s opinion, ISAs require the auditor to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Reasonable assurance is a high level of assurance. It is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (that is, the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated) to an acceptably low level.

However, reasonable assurance is not an absolute level of assurance, because there are inherent limitations of an audit which result in most of the audit evidence on which the auditor draws conclusions and bases the auditor’s opinion being persuasive rather than conclusive. The concept of materiality is applied by the auditor both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements.1 In general, misstatements, including omissions, are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Judgments about materiality are made in the light of surrounding circumstances, and are affected by the auditor’s perception of the financial information needs of users of the financial statements, and by the size or nature of a misstatement, or a combination of both. The auditor’s opinion deals with the financial statements as a whole and therefore the auditor is not responsible for the detection of misstatements that are not material to the financial statements as a whole.

The objectives, requirements and application and other explanatory material are designed by the auditor in obtaining reasonable assurance. It required that the auditor exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit and, among other things:

• Identify and assess risks of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity’s internal control.

• Obtain sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks.

• Form an opinion on the financial statements based on conclusions drawn from the audit evidence obtained.

The form of opinion expressed by the auditor will depend upon the applicable financial reporting framework and any applicable law or regulation. The auditor may also have certain other communication and reporting responsibilities to users, management, those charged with governance, or parties outside the entity, in relation to matters arising from the audit.

■Related law system

a) Internal audit

Internal audit is controlled by The Institute of Internal Auditor (IAA). As The IIA’s premier designation for more than 40 years, the CIA sets the standard for excellence within the profession. The CIA journey begins with a focus on The Institute of Internal Auditor’s International Standards for the Professional Practice of Internal Auditing (Standards) and aspects of mandatory guidance under the IPPF. The journey continues with a focus on managing an internal audit project and culminates with concepts related to internal control, risk, governance, and technology. The CIA is a 3-part process for establishing your foundational core and starting point for career growth to:

· Distinguish you from your peers.

· Demonstrate your proficiency with internal staff and external clients.

· Develop your knowledge of best practices in the industry.

· Demonstrate your proficiency and professionalism.

· Lay a foundation for continued improvement and advancement

Internal audit performs follow International Standards for the Professional Practice of Internal Auditing (Standards). Standards are principle-focused and provide a framework for performing and promoting internal auditing. The Standards are mandatory requirements consisting of:

· Statements of basic requirements for the professional practice of internal auditing and for evaluating the effectiveness of its performance. The requirements are internationally applicable at organizational and individual levels.

· Interpretations, which clarify terms or concepts within the statements.

· Glossary terms.

It is necessary to consider both the statements and their interpretations to understand and apply the Standards correctly. The Standards employ terms that have been given specific meanings as noted in the Glossary, which is also part of the Standards.

b) External audit

In 1948, a group of accountants led a successful motion to form an organization for accounting professions. “Accountant Association of Thailand” was founded on 13th October 1948 after approval was requested and received from National Culture Council. On 24th May 1975, the association was renamed to “Institute of Certified Accountants and Auditors of Thailand” and its operation scope had been extended to more accounting professions among its members. 13th October had become foundation day for national accounting professions organization until it was later changed to 23th October when Accounting Professions Acts 2547 BE was first enacted on 23rd October 2004.

Legal effort to certify accounting professions to government and become center for accounting professions in Thailand had begun since 1937. The first draft of “Accountant Act” was written in 1953; and after many revisions, “Public Accountant Act 2505 BE” was enacted and became effective on 2nd November 1962.

There were continuing efforts to institutionalize accounting professions. On 6th September 1994, the National Assembly OR the Cabinet of Thailand had approved draft of “Accountant Federation Act” but was later postponed due to change of government.
Finally, on 23rd October 2004, Accounting Professions Act 2547 BE, approved by His Majesty the King, became effective. The Accounting Profession Act aims to put every accounting professional under regulation by FAP which is operated and monitored by accounting professionals themselves, similar to other professional federations. Accounting professionals are united for benefits to professional development and livelihood.

FAP was officially under His Majesty The King’s Royal Patronage on 6th September 2005 bringing pride, happiness, and morale to all FAP’s responsible staffs and accounting professionals to work their bests to achieve FAP’s objectives. External auditor performs the audit follow Thai Financial Reporting Standards for publicly accountable entities and non-publicly accountable entities depend on the business size and type

Thai Financial Reporting Standards for non-publicly accountable entities is referenced from International Financial Reporting Standard for Small and Medium-sized Entities. Small and medium-sized entities are entities that:

(a) Do not have public accountability, and

(b) Publish general purpose financial statements for external users. Examples of external users include owners who are not involved in managing the business, existing and potential creditors, and credit rating agencies.

An entity has public accountability if:

(a) its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or

(b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks.

Some entities may also hold assets in a fiduciary capacity for a broad group of outsiders because they hold and manage financial resources entrusted to them by clients, customers or members not involved in the management of the entity. However, if they do so for reasons incidental to a primary business (as, for example, may be the case for travel or real estate agents, schools, charitable organizations, co-operative enterprises requiring a nominal membership deposit, and sellers that receive payment in advance of delivery of the goods or services such as utility companies), that does not make them publicly accountable. If a publicly accountable entity uses this IFRS, its financial statements shall not be described as conforming to the IFRS for SMEs—even if law or regulation in its jurisdiction permits or requires this IFRS to be used by publicly accountable entities.

A subsidiary whose parent uses full IFRSs, or that is part of a consolidated group that uses full IFRSs, is not prohibited from using this IFRS in its own financial statements if that subsidiary by itself does not have public accountability. If its

Financial statements are described as conforming to the IFRS for SMEs, it must comply with all of the provisions of this IFRS. For Thai Financial Reporting Standards for publicly accountable entities is referenced from International Financial Reporting Standards IFRS (issued by International Accounting Standards Board :IASB), International Accounting Standards ( issued by International Accounting Standards Committee: IASC ).

Thailand Accounting Standards Board (TAS) prepare and revise Thai Financial Reporting Standards follow The International Reporting Standards revised version as at 31 December 2014 (Bound Volume 2015 Consolidated without early application). Thai Financial Reporting Standards (TFRS)
and Thai Accounting Standards (TAS) as below shall be applied for annual periods beginning on or after 1 January 2016.

	Thai Accounting Standards (TAS)		Effective date	IAS Ref.
1	The Conceptual financial Reporting Standards (revised 2015)			Framework for the Preparation and Presentation of Financial Statements
2	TAS 1 (revised 2015)	Presentation of Financial Statements	8 November 2015	IAS 1 Presentation of Financial Statements
3	TAS 2 (revised 2015)	Inventories	4 September 2015	IAS 2 Statement of Cash Flows
4	TAS 7 (revised 2015)	Statement of Cash Flows	4 September 2015	IAS 7 Statement of Cash Flows
5	TAS 8 (revised 2015)	Accounting Policies, Changes in Accounting Estimates and Errors	4 September 2015	IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
6	TAS 10 (revised 2015)	Events after the Reporting Period	4 September 2015	IAS 10 Events after the Reporting Period
7	TAS 11 (revised 2015)	Construction Contracts	4 September 2015	IAS 11 Construction Contracts
8	TAS 12 (revised 2015)	Income Taxes	4 September 2015	IAS 12 Income Taxes
9	TAS 16 (revised 2015)	Property, Plant and Equipment	4 September 2015	IAS 16 Property, Plant and Equipment
10	TAS 17 (revised 2015)	Leases	4 September 2015	IAS 17 Leases
11	TAS 18 (revised 2015)	Revenue	4 September 2015	IAS 18 Revenue
	Thai Accounting Standards (TAS)		Effective date	IAS Ref.
12	TAS 19 (revised 2015)	Employee Benefits	8 November 2015	IAS 19 Employee Benefits
13	TAS 20 (revised 2015)	Accounting for Government Grants and Disclosure of Government Assistance	4 September 2015	IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
14	TAS 21 (revised 2015)	The Effects of Changes in Foreign Exchange Rates	4 September 2015	IAS 21 The Effects of Changes in Foreign Exchange Rates
15	TAS 23 (revised 2015)	Borrowing Cost	4 September 2015	IAS 23 Borrowing Costs
16	TAS 24 (revised 2015)	Related Party Disclosures	4 September 2015	IAS 24 Related Party Disclosures
17	TAS 26 (revised 2015)	Accounting and Reporting by Retirement Benefit Plans	4 September 2015	IAS 26 Accounting and Reporting by Retirement Benefit Plans
18	TAS 27 (revised 2015)	Consolidated and Separate Financial Statements	4 September 2015	IAS 27 Consolidated and Separate Financial Statements
19	TAS 28 (revised 2015)	Investment in Associates	4 September 2015	IAS 28 Investments in Associates
20	TAS 29 (revised 2015)	Financial Reporting in Hyperinflationary Economics	4 September 2015	IAS 29 Financial Reporting in Hyperinflationary Economies
21	TAS 33 (revised 2015)	Earnings per Share	4 September 2015	IAS 33 Earnings per Share
22	TAS 34 (revised 2015)	Interim Financial Reporting	4 September 2015	IAS 34 Interim Financial Reporting
23	TAS 36 (revised 2015)	Impairment of Assets	8 November 2015	IAS 36 Impairment of Assets
24	TAS 37 (revised 2015)	Provisions, Contingent Liabilities and Contingent Assets	4 September 2015	IAS 37 Provisions, Contingent Liabilities and Contingent Assets
25	TAS 38 (revised 2015)	Intangible Assets	4 September 2015	IAS 38 Intangible Assets
26	TAS 40 (revised 2015)	Investment Property	4 September 2015	IAS 40 Investment Property
27	TAS 41	Agriculture	-	-
	Thai Financial Reporting Standards (TFRS)		Effective date	IFRS Ref.
28	TFRS 2 (revised 2015)	Share-based Payment	8 November 2015	IFRS 2 Share-based Payment
29	TFRS 3 (revised 2015)	Business Combinations	4 September 2015	IFRS 3 Business Combinations
30	TFRS 4 (revised 2015)	Insurance Contracts	4 September 2015	IFRS 4 Insurance Contracts
	Thai Financial Reporting Standards (TFRS)		Effective date	IFRS Ref.

31	TFRS 5 (revised 2015))	Non-current Assets Held for Sale and Discontinued Operations	4 September 2015	IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
32	TFRS 6 (revised 2015)	Exploration for and Evaluation of Mineral Resources	4 September 2015	IFRS 6 Exploration for and Evaluation of Mineral Resources
33	TFRS 8 (revised 2015)	Operating Segment	4 September 2015	IFRS 8 Operating Segments
34	TFRS 10(revised 2015)	Consolidated. Financial Statements	4 September 2015	IFRS 10 Consolidated. Financial Statements
35	TFRS 11(revised 2015)	Joint Arrangements	4 September 2015	IFRS 11 Joint Arrangements
36	TFRS 12 (revised 2015)	Disclosure of Interests in Other Entities	4 September 2015	IFRS 12 Disclosure of Interests in Other Entities
37	TFRS 13 (revised 2015)	Fair Value Measurement	8 November 2015	IFRS 13 Fair Value Measurement
	Interpretations		Effective date	IFRS Ref.
38	T SIC 10	Government Assistance-No specifie Relation to Operating Activities	4 September 2015		SIC 10 Government Assistance—No Specific Relation to Operating Activities
39	T SIC 15	Operating Leases-Incentives	4 September 2015		SIC 15 Income Taxes—Recovery of Revalued Non-Depreciable Assets
40	T SIC 25	Income Taxes-Changes in the Tax Status of an Entity or its Shareholders	4 September 2015		SIC 25 Income Taxes—Changes in the Tax Status of an Entity or its Shareholders
41	T SIC 27	Evaluating the Substance of Transactions Involving the Legal Form of a Lease	4 September 2015		SIC27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
42	T SIC 29	Service Concession Arrangements : Disclosures	4 September 2015		SIC 29 Service Concession Arrangements: Disclosures
43	T SIC 31	Revenue-Barter Transactions Involving Advertising Services	4 September 2015		SIC 31 Revenue—Barter Transactions Involving Advertising Services
	Interpretations		Effective date	IFRS Ref.
44	T SIC 32	Intangible Assets-Web Site Costs	4 September 2015		SIC 32 Intangible Assets—Web Site Costs
45	TFRIC 1	Changes in Existing Decommissioning, Restoration and Similar Liabilities	4 September 2015		IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities
46	TFRIC 4	Determining whether an Arrangement contains a Lease	4 September 2015		IFRIC 4 Determining whether an Arrangement contains a Lease
47	TFRIC 5	Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds	4 September 2015		IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
48	TFRIC 7	Applying the Restatement Approach under TAS29 Financial Reporting in Hyperinflationary Economics	4 September 2015		IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
49	TFRIC 10	Interim Financial Reporting and Impairment	4 September 2015		IFRIC 10 Interim Financial Reporting and Impairment
50	TFRIC 12	Service Concession Arrangements	4 September 2015		IFRIC 12 Service Concession Arrangemnts
51	TFRIC 13	Customer Loyalty Programmes	4 September 2015		IFRIC 13 Customer Loyalty Programmes
52	TFRIC 14		4 September 2015
53	TFRIC 15	Agreements for the Construction of Real Estate	4 September 2015		IFRIC 15 Agreements for the Construction of Real Estate
54	TFRIC 17	Distributions of Non-cash Assets to Owners	4 September 2015		IFRIC 17 Distributions of Non-cash Assets to Owners
55	TFRIC 18	Transfers of Assets from Customer	4 September 2015		IFRIC 18 Transfers of Assets from Customers
56	TFRIC 20	Stripping Cost in the Production Phase of a Surface Mine	4 September 2015		IFRIC 20 Stripping Cost in the Production Phase of a Surface Mine
57	TFRIC 21	Levies	8 November 2015		IFRIC 21 Levies

■Obligation to audit

Internal audit

The Institute of Internal Auditors (IIA) defines Internal Auditing as:

“An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. The internal audit activity helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.”

Consistent with its mission, the Internal Audit Department provides management with information, appraisals, recommendations, and counsel regarding the activities examined and other significant issues.

The department executes an approved audit plan and will perform the following tasks in accordance with its overall strategy:

§ Verify the existence of assets and recommend proper safeguards for their protection;

§ Evaluate the adequacy of the system of internal controls;

§ Recommend improvements in controls;

§ Assess compliance with policies and procedures and sound business practices;

§ Assess compliance with state and federal laws and contractual obligations.

§ Review operations/programs to ascertain whether results are consistent with established objectives and whether the operations/programs are being carried out as planned;

§ Investigate reported occurrences of fraud, embezzlement, theft, waste, etc.

Independence is essential to the effectiveness of the internal audit function. In carrying out the duties and responsibilities, the Director of Internal Audit will issue reports to the Vice President and General Counsel in charge of the internal audit function, Senior Vice President, and the Vice President concerned. The Director of Internal Audit will meet with the Finance and Audit Committee of the Board of Trustees periodically to report the plans for audit activity, the results of audit activity, and to provide any other information required. The Director of Internal Audit has direct access to the President and the Board should matters of immediate significance arise which demand such attention.

External audit

The external auditor is responsible for expression an opinion on these financial statements based on my audit and conducted audit in accordance with Thai Standards on Auditing. Those standards required to comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An external audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making the risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Auditor will assure that auditor obtain sufficient evidence and appropriate to provide a basis for my audit opinion.

■Content of audit

Internal audit

1. Internal audit is an independent appraisal function established by the management of an organisation for the review of the internal control system as a service to the organisation. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic and effective use of resources.

2. The essentials for effective internal auditing are:

(a) independence

The internal auditor should have the independence in terms of organisational status and personal objectivity which permits the proper performance of his duties.

(b) staffing and training

The internal audit unit should be appropriately staffed in terms of numbers, grades, qualifications and experience, having regard to its responsibilities and objectives. The internal auditor should be properly trained to fulfil all his responsibilities.

The internal auditor should seek to foster constructive working relationship and mutual understanding with management, with external auditors, with any other review agencies and, where one exist, the audit committee.

(d) due care

The internal auditor should exercise due care in fulfilling his responsibilities.

(e) planning, controlling and recording

The internal auditor should adequately plan, control and record his work.

(f) evaluation of the internal control system

The internal auditor should identify and evaluate the organisation's internal control system as a basis for reporting upon its adequacy and effectiveness.

(g) evidence

The internal auditor should obtain sufficient, relevant and reliable evidence on which to base reasonable conclusions and recommendations.

(h) reporting and follow-up

The internal auditor should ensure that findings, conclusions and recommendations arising from each internal audit assignment are communicated promptly to the appropriate level of management and he should actively seek a response. He should ensure that arrangements are made to follow up audit recommendations to monitor what action has been taken on them.

External audit

The auditor’s opinion on the financial statements deals with whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. Such an opinion is common to all audits of financial statements. The auditor’s opinion therefore does not assure, for example, the future viability of the entity nor the efficiency or effectiveness with which management has conducted the affairs of the entity.

In some jurisdictions, however, applicable law or regulation may require auditors to provide opinions on other specific matters, such as the effectiveness of internal control, or the consistency of a separate management report with the financial statements. While the ISAs include requirements and guidance in relation to such matters to the extent that they are relevant to forming an opinion on the financial statements, the auditor would be required to undertake further work if the auditor had additional responsibilities to provide such opinions.

■People who have qualification of audit

Internal audit

Six Steps to Certification, Below are the six steps an internal auditor should review when making the decision to become certified in the profession.

Step 1: Decide Which Certification is Right for You

The IIA's Certified Internal Auditor (CIA) certification is the only globally accepted designation for internal auditors. It is a three-part exam that remains the standard by which individuals demonstrate their comprehensive competence and professionalism in the internal auditing field.

The IIA also offers four specialty certifications:

Certification in Control Self-Assessment (CCSA)

Certified Government Auditing Professional (CGAP)

· Certified Financial Services Auditor (CFSA)

Certification in Risk Management Assurance (CRMA)

Individuals who do not meet the CIA program education and experience eligibility requirements may wish to take one of the specialty certifications, which are one-part exams.

Step 2: Determine Your Eligibility and Skill Level

Each of The IIA certification programs has unique and specific education eligibility requirements that a candidate must meet to take the exam. In addition, you may want to assess your skill level by taking a practice test using the sample questions on the website. Although your score on a practice test will not necessarily indicate what your score would be on a certification exam, a practice test may assess your readiness and lets you know in what areas you need improvement.

Step 3: Register for the Exam

The IIA's certification exams are now offered year-round through computer-based testing at more than 500 locations worldwide.

Step 4: Prepare for the Exam

You determine the method(s) in which you need to prepare for the exam. A variety of third-party providers offer exam review courses.

In addition, consider joining one of the exam-related social media groups to connect with others preparing for the exam. Each exam has its own LinkedIn group and there is a

Step 5: Take the Exam

With the transition to computer-based testing, The IIA's certification exams are administered through the worldwide network of Pearson VUE Testing Centers. The Pearson VUE network enables candidates to take exams at over 500 sites. The Certification Candidate Handbook provides more information on the testing experience.

Pearson VUE (PV) offers three different types of exam testing sites. This video depicts the experience at a Pearson Professional Center (versus a PV Select or PV Testing Center).

Step 6: Receive Your Certificate

Once you pass the exam and meet all other program requirements, you will be eligible to receive your certificate. To order your certificate, you must log into your candidate record in CCMS and complete the certificate order form. The certificate will be shipped directly to you using a standard postal service method at no charge. Expedited shipping is also available at an additional cost.

Certificate reprints are also available through this order system for a fee of US $50. Shipping using a standard postal service method will be at no charge. Expedited shipping is also available at an additional cost.

In some instances, candidates who belong to certain Institutes will not be able to order their certificates directly. These certificates are sent directly to their Institute and the candidate will be contact by that Institute to be awarded their certificate.

External audit

Certified Public Accountant (CPA) is the title of qualified accountants in numerous countries. In Thailand they will meet the below condition:

1. Graduate of bachelor degree in Accounting or case of study must pass the specific subject of accounting.

2. Pass the examination of 6 subjects consist of Accounting 1, Accounting 2, Auditing 1, Auditing 2, Law 1 and 2 that related to auditing professions and Auditing by computer.

3. Have experience in business auditing (training by auditor) with the continued period minimum 3 year and totaling at least 3,000 hours.

After got the CPA license, that CPA still continue to attend seminar course or training at least 18 hours every year and the maximum job can provide each year not over 200 clients.

6.7 BOI Audit

BOI Audit

■What is the BOI Audit

According to the Procedures for Obtaining Promotional Privileges. The chart that appear on this and the following pages identify, in detail, the procedural aspects of applying for BOI privileges. The major steps along the road to approval are:

Action required after a Project is Approved for Promotion

· The OBOI will inform the applicant in writing within 7 working days of the approval date, detailing the conditions, privileges and benefits granted. An application form for the promotion certificate will be attached, together with the notification of approval

· Upon receipt of the OBOI letter approving the project, the applicant must reply by completing the form of promotion acceptance and sending it back to the OBOI within one month. If any changes or special conditions and privileges are sought, they should be requested at that time

· If the applicant is unable to reply within the stated time limit, a letter of clarification should be sent to the OBOI, which will consider extending the deadline by not more than one month at a time, up to a maximum of three times

· In order to receive the investment promotion certificate, the applicant must set up the company within six months of accepting the approval, and submit all of the following documents to the OBOI:

o Application form for promotion certificate

o The memorandum of association

o The certificate of business registration

o A certificate stating the registered capital, a list of directors indicating those empowered to bind the company, and the address of the head office

o A list of the shareholders and their nationalities

o A document showing the transfer of funds from overseas, or a certificate of investment from overseas issued by the Bank of Thailand for foreign investors

o A joint venture contract, licensing agreement, technical assistance contract and/or technology transfer contract (if any)

o Form of utility and manpower requirements.

· If the applicant is unable to submit the documents within the required time frame, an explanatory letter must be sent to the OBOI, which will consider extending the deadline by four months at a time, up to a maximum of three times

· The OBOI will issue the investment promotion certificate after receipt of all specified documents, and the promoted company must follow the conditions laid out in the Certificate.

· If there are any discrepancies or errors, or if an amendment is sought, the OBOI must be notified in writing, with all relevant documents attached.

Accounting and Financial Reporting Requirements

Reporting Requirements

■Books of Accounts and Statutory Records

Companies must keep books and follow accounting procedures as specified in the Civil and Commercial Code, the Revenue Code, and the Accounts Act. Documents may be prepared in any language, provided that a Thai translation is attached. All accounting entries should be written in ink, typewritten, or printed. Specifically, Section 12 of the Accounts Act of 2000 provides rules on how accounts should be maintained:

“In keeping accounts, the person with the duty to keep accounts must hand over the documents required for making accounting entries to the bookkeeper correctly and completely, in order that the accounts so kept may show the results of operations, financial position according to facts and accounting standards.”

■Accounting Period

An accounting period must be 12 months. Unless the Articles of Association state otherwise, a newly established company should close accounts within 12 months of its registration. Thereafter, the accounts should be closed every 12 months. If a company wishes to change its accounting period, it must obtain written approval from the Director-General of the Revenue Department.

■Reporting Requirements

All juristic companies, partnerships, branches of foreign companies, and joint ventures are required to prepare financial statements for each accounting period. The financial statement must be audited by and subjected to the opinion of a certified auditor, with the exception of the financial statement of a registered partnership established under Thai law, whose total capital, assets, and income are not more than that prescribed in Ministerial Regulations. The performance record is to be certified by the company’s auditor, approved by shareholders, and filed with the Commercial Registration Department of the MOC and with the Revenue Department of the Ministry of Finance (MOF).

For a private limited company, the director is responsible for arranging the annual meeting of shareholders to approve the company’s audited financial statement within 4 months at the end of the fiscal year, and filing the audited statement and supporting documents, including a list of shareholders on the date of the meeting, to the Registrar no later than 1 month after the date of the shareholder meeting.

For a foreign company, i.e. branch office, representative office or regional office, and excluding joint ventures, the Manager of the branch office must submit a copy of the financial statement to the Registrar no later than 150 days after the end of the fiscal year. Approval of the shareholder meeting is not required.

For a public limited company, the director is responsible for arranging the annual meeting of shareholders to approve the audited financial statements of a company within 4 months at the end of the fiscal year. A copy of the audited financial statement and annual report, together with a copy of the minutes of the shareholder meeting approving the financial statement, should be certified by the director and submitted to the Registrar, along with a list of shareholders on the date of the meeting, no later than 1 month after approval at the shareholder’s meeting. In addition, the company is required to publish the balance sheet for public information in a newspaper for a period of at least 1 day within 1 month of the date it was approved at the shareholder’s meeting.

■Accounting Principles

In general, the basic accounting principles practiced in the United States are accepted in Thailand, as are accounting methods and conventions sanctioned by law. The Institute of Certified Accountants and Auditors of Thailand is the authoritative group promoting the application of generally accepted accounting principles.

Any accounting method adopted by a company must be used consistently and may be changed only with approval of the Revenue Department. Certain accounting practices of note include:

Depreciation: The Revenue Code permits the use of varying depreciation rates according to the nature of the asset, which has the effect of depreciating the asset over a period that may be shorter than its estimated useful life. These maximum depreciation rates are not mandatory. A company may use a lower rate that approximates the estimated useful life of the asset. If a lower rate is used in the books of the accounts, the same rate must be used in the income tax return.

Accounting for Pension Plans: Contributions to a pension or provident fund are not deductible for tax purposes unless they are actually paid out to the employees, or if the fund is approved by the Revenue Department and managed by a licensed fund manager.

Consolidation: Local companies with either foreign or local subsidiaries are not required to consolidate their financial statements for tax and other government reporting purposes, except for listed companies, which must submit consolidated financial statements to the Securities and Exchange Commission of Thailand .

Statutory Reserve: A statutory reserve of at least 5% of annual net profit arising from the business must be appropriated by the company at each distribution of dividends until the reserve reaches at least 10% of the company's authorized capital.

Stock Dividends: Stock dividends are taxable as ordinary dividends and may be declared only if there is an approved increase in authorized capital. The law requires the authorized capital to be subscribed in full by the shareholders.

■Auditing Requirements and Standards

Audited financial statements of juristic entities (i.e. a limited company, registered partnership, branch, representative office, regional office of a foreign corporation, or joint venture) must be certified by an authorized auditor and be submitted to the Revenue Department and to the Commercial Registrar for each accounting year.

However, for a registered partnership with registered capital of less than five million baht, total revenue of no more than 30 million baht, and total assets of no more than 30 million baht, financial statement does not need to be certified by an authorized auditor.

Auditing practices conforming to international standards are, for the most part, recognized and practiced by authorized auditors in Thailand

■Content of BOI audit

BOI, The Board of Investment Thailand. Thailand offers great opportunities for both Thai and foreign investors. The Board of Investment (BOI), Thailand’s governing body to promote investments, helps investors in three key ways: to reduce the risks associated with investment; to reduce initial investment costs and to improve the overall rate of return on investment; and to provide support services at all times. The Board of Investment has the power to grant the following privileges depending on the specifics of the investment plan:

· Exemption from rules restricting foreign ownership of companies;

· Exemption from corporate income tax for up to 8 years;

· Exemption of import duties on machinery and raw materials;

· Exemption from rules restricting foreign ownership of land;

· Exemption from work permit and visa rules; and

· Exemption from rules restricting overseas remittances.

Below is the important information relate to BOI knowledge;

A. Policies and Criteria

A1. List of Activities Eligible for Promotion

Section 1: Agriculture and Agricultural Products
Section 2: Mining, Ceramics and Basic Metals
Section 3: Light Industry
Section 4: Metal Products, Machinery and Transport Equipment
Section 5: Electronic Industry and Electric Appliances
Section 6: Chemicals, Paper and Plastics
Section 7: Services and Public Utilities

A2. Criteria for BOI project approval.
Normally, BOI will use 4 criteria for approval of its projects:

Minimum investment is Baht 1 million.
Using modern and advanced technology.
Debt / Equity ratio is more than 3/1
Added Value is more than 20%.

A3. Procedures for application of BOI Approval

Preparation of application form.
Filling the application form / declare the project details
Approval of the project. Approval can be granted according to size of each project as below:
- Project size with less than Baht 80 million will be approved by the Office of Board of Investment from 40 – 50 days.
- Project size from Baht 80 – 750 million will be approved by the Committee for 60 days.
- Project size with over than Baht 750 million will be approved by the Board of Investment and the Prime Minister for 90 days.
Notification of the result of its approval.
Response / Resolution Appeal (In case that was not approved)
Issuance of BOI card.

B. The Rights and Privileges from the BOI

B1. The Related Tax and Non – Tax Rights and Privileges

The Rights and Privileges Related to Tax
Exemption of Corporate Income tax (Section 31, 34 of Investment Promotion ACT B.E.2520 )

Section.31(1) Exemption of income tax derived from proportion of total investment excluding amount of Land and working capital within 8 years from the date that first income is derived from such activity. ( BOI card issued before 1st December 2001 has no limitation on exemption of income tax)

Section.31 (3) The income on which the computation of the net profit derived from the activity referred to either paragraph one or two shall include income from the sale of such by-products and semi-manufactured products.

Section.31 (4) In case that the business had loss during the period of receiving exemption of income tax referred to either paragraph one or two, BOI may allow the business to deduct annual loss from the net profit after the expiration of the period of exemption of income tax for the period of not more than 5 years from the expiration date.

Section.34 Dividends derived from BOI business with exemption of income tax referred to Section 31, shall be exempted from computation of taxable income throughout the period.
Exemption of import duties on machinery.(Section.28,29)
Exemption of import duties on raw materials.(Section.30,36)

The Rights and Privileges Not Related to Tax (Non-Tax)
Rights granted with unlimited time and equal zones to the following:
- Import of foreign skilled craftsman (Section.24,25,26)
- Ownership of land (Section 37)
- Remittance of money out of Thailand (Section 37)

B2. Criteria of Using The Rights and Privileges:

By location or factory zone 3>2>1
By category of Industry
By special measures

Specific Project Guidelines:

- Criteria for Shareholders

1.Thai shares must not be less than 51% for the following businesses:
- Agriculture, livestock and fishery
- Survey and ore mining
- Business services referred to the annex 1 of the Foreign Business Act. B.E.2542.

2. Industrial businesses allow foreigner for majority shareholding or to hold majority of shares.

- Location or factory zone

Can set the factory in every zone except for the following businesses that have to set up in industrial zone: tan leather, fabric products, and frozen products, repair parts of car, electrical equipment and recycling business.

- ISO Condition

Project with investment starting 10 million baht (not including cost of land and working capital) have to get the certificate of ISO 9000 standard or other equivalent international standards within 2 years from the starting date of business operation.
If cannot follow the above condition, the rights for exemption of corporate income tax will be cancelled for 1 year (last year).

B3 Start - End of Rights and Privileges

Corporate Income Tax; From the date that the first income is incurred
Import duty on machinery ; Within the period detailed in the BOI card but can still continue when the BOI card is expired until notification to close the business.
Import duty on raw materials; Within the period detailed in the BOI card from the date of first import.

C. Main points of BOI card

C1 Card number XXXXXX(2)/2552. Each card has a set number entered under the code in “( )” which means:

(2)            Must file a request for permission of rights but not specify the tax value.
(3)            Must file a request to use the rights with tax value specified.
(3-7)         Other special measures (Agriculture STL, SMEs, HDD, Software)
(8-9)         Allowed for special measures and not specify the tax value/ Business projects are transferred
Initial with 7     Migration Project (Not originally from BOI )/Migration Project (Originally from BOI )

C2. The Rights and Privileges
C3. General Conditions
C4. Specific Terms
C5. Editing Rights and Benefits Items

Remark Tips of BOI

Use of rights can be able to get in every application
Conditions must report on time and condition
BOI card Representation of the agreement with details of rights and conditions to do

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Audit Program on Compliance with the Condition of Promotion Certificate (Issued by the Office of Board of Investment Committee)

Company………………………………………………..
Audit Program on Compliance with the Condition of Promotion Certificate
Issued by the Office of Board of Investment Committee

Objectives of the Audit Program

1) To have actual investment in machinery of each Promotion Certificate as approved by the Board of Investment

2) To have quantity of production and sales in compliance with the condition of each Promotion Certificate

Audit Program

Reference

Done By

Date

1) Request Promotion Certificate and understand the details of the condition, Rights and Benefits obtained from the promotion of investment of each Promotion Certificate.

Investment in Machinery
2) Request details of machinery including the summarized movement of each Promotion Certificate showing beginning forward, increase, decrease and carry forward.

2.1 Check the beginning forward in details of machinery with the carry forward in the same details of the previous year (in case the audit is continued from the previous year).
2.2 Check the additional purchase items of machinery in the period with the documents of purchasing and payment such as Delivery Note/Packing list, Import Customs Clearance, Letter of Credit, Trust receipt, Debit Note from Bank, Bank Statement, and Receipts.
2.3 Check the details of additional machinery purchased during the period with the condition of each Promotion Certificate such as capacity of production, due of machinery importation.
2.4 Request location map of machinery and perform physical count of the machinery purchased during the period and check whether number of machinery matched with the document of purchase and import.
2.5 Compare the details of additional investment in machinery with the details in application form for Enjoying Corporate Income Tax Exemption.

Quantity of Production
3) Request details of quantity of production (unit) of each machine separately by each Promotion Certificate as follows:

Daily quantity of production
Monthly quantity of production
Annual quantity of production

3.1 Test the reliability of above details with the sources of data such as daily production report of production department and the stock card.
3.2 Compare the capacity of production of each Promotion Certificate with the actual annual quantity of production.
3.3 Compare the capacity of production of each Promotion Certificate and quantity of production as mentioned in 3.2 with the details in application form for Enjoying Corporate Income Tax Exemption.

Quantity and Value of Sales
4) Request details of quantity and value of sales separately by each Promotion Certificate as follows:

Daily quantity and value of sales
Monthly quantity and value of sales
Annual quantity and value of sales

4.1 Test the reliability of above details by checking with sales documents such as invoice, delivery order etc., and with records of sales, and trace to the out-movement in stock card. In case of returned goods, check the documents of returned goods with records of returned goods and in-movement in stock card.
4.2 Compare the annual quantity of sale shown in the details with the condition under Promotion Certificate to ensure that quantity of sales does not exceed the quantity under the condition.
4.3 Compare the quantity and value of sales from above details with the details in application form for Enjoying Corporate Income Tax Exemption.

Scope of test
Checking Sales Documents:

In case of having 1 or 2 Promotion Certificates, at least 20 transactions (Invoice) per Promotion Certificate shall be checked.
In case of having 3 or more Promotion Certificates, at least 50 transactions (Invoice) in total, with all Promotion Certificates and equal number of transactions each, shall be checked.

5) Review the minutes of the Shareholders’ meeting, board of management and other board of directors to consider any matter significant to the above audit.

6) Other audit Procedure

Auditor Report on Compaliance with the Condition of BOI Promotion Certificate

Auditor Report on Compliance
with the Condition of BOI Promotion Certificate

To Board of Directors
………………………………………..

We have audited the information in the application form for Enjoying Corporate Income Tax Exemption of the entity under BOI promotion related to investment value on increase in machinery, quantity of production and quantity and value of sales used for enjoying corporate income tax exemption of …………………………………….. for the period ending ………………………… This audit has been conducted in accordance with the agreed-upon procedures as prescribed by the Office of the Board of Investment as attached herewith.

We have conducted the audit in accordance with the auditing standards related to the agreed-upon procedures. The purpose of such procedures is to assist the Office of the Board of Investment in approval of application form for Enjoying Corporate Income Tax Exemption.

We would like to report the fact found from our audit as follows:

Investment in Machinery

Refer to Audit program item 2.2, we found that the increase in purchase of machinery during the period and the supporting documents for purchase and payment were: